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Year-to-date advertising and sales promotion expenses were

SAN DIEGO – July 10, 2017 ― WD-40 Company (NASDAQ:WDFC), a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world, today reported financial results for its third fiscal quarter ended May 31, 2017.

Financial Highlights and Summary

·

Total net sales for the third quarter were $98.2 million, an increase of 2 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $283.9 million, an increase of $0.4 million compared to the prior year fiscal period.

·

Translation of the Company’s foreign subsidiary results to U.S. dollars had an unfavorable impact on sales for the current quarter and year-to-date. On a constant currency basis total net sales would have been $102.9 million for the third quarter and $301.0 million year-to-date.

·

Net income for the third quarter was $14.4 million, an increase of 14 percent compared to the prior year fiscal quarter. Year-to-date net income was $38.6 million, an increase of $0.2 million from the prior year fiscal period.

·

Diluted earnings per share were $1.02 in the third quarter, compared to $0.88 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $2.71 compared to $2.65 in the prior year fiscal period.

·

Gross margin was 55.3 percent in the third quarter compared to 56.8 percent in the prior year fiscal quarter. Year-to-date gross margin was 56.3 percent compared to 55.9 percent in the prior year fiscal period.

·

Selling, general and administrative expenses were down 6 percent in the third quarter to $27.6 million when compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses were up 1 percent to $86.4 million compared to the prior year fiscal period.

·

Advertising and sales promotion expenses were down 13 percent in the third quarter to $5.4 million when compared to the prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were down 10 percent to $15.3 million compared to the prior year fiscal period.

"We had a solid quarter and are pleased that we achieved both sales and earnings results which reflect new record highs for the Company,” said Garry Ridge, WD-40 Company’s president and chief executive officer. “Fluctuating foreign currency exchange rates continue to obscure our sales results but if you remove their impact our consolidated sales would have increased by about 4 percent over the prior year fiscal third quarter. Overall, while we continue to see fluctuations in certain markets quarter to quarter, our long-term growth plans remain stable,” continued Ridge.

Net Sales by Segment (in thousands):

Three Months Ended May 31,

Nine Months Ended May 31,

2017

2016

Change

2017

2016

Change

Americas

$

49,046

$

49,878

(2)%

$

136,964

$

139,832

(2)%

EMEA

34,386

32,922

4%

100,848

100,634

-

Asia-Pacific

14,746

13,646

8%

46,133

43,052

7%

Total

$

98,178

$

96,446

2%

$

283,945

$

283,518

-

·

Net sales by segment as a percent of total net sales for the third quarter were as follows: for the Americas, 50 percent; for EMEA, 35 percent; and for Asia-Pacific, 15 percent.

·

Net sales in the Americas were down 2 percent in the third quarter primarily due to lower sales of maintenance products in the U.S., which declined 3% from period to period. This lower level of sales was primarily attributable to shifting buying patterns in some trade channels as well as efforts of certain of our customers to more closely manage their inventory levels. The sales decrease in the U.S. was partially offset by higher sales of maintenance products in Canada and Latin America.

·

Net sales in EMEA increased 4 percent in the third quarter primarily due to a 16 percent increase in sales in the EMEA distributor markets compared to the prior year fiscal period primarily due to higher sales of WD-40 Multi-Use Product in Eastern Europe, particularly in Russia. Changes in foreign currency exchange rates had an unfavorable impact on sales for the EMEA segment from period to period. On a constant currency basis EMEA sales for the third quarter would have increased by $6.0 million or 18 percent compared to the prior fiscal year period.

·

Net sales in Asia-Pacific increased 8 percent in the third quarter primarily due to a 12 percent increase in sales in the Asia-Pacific distributor markets and a 6 percent increase in sales in China. The sales growth in the Asia distributor markets was primarily attributable to the timing of customer orders and a higher level of promotional activities for WD-40 Multi-Use Product. The growth in China was due to new distribution and continued growth in sales to the Company’s largest customers throughout China. Changes in foreign currency exchange rates did not have a material impact on sales in the Asia-Pacific segment.